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my friend skunk baxter, always a delight for me. everyone is watching. that does it for me. i'm greg gutfeld, see you later. next time, i don't know where. >> bret: north korea threatens to get physical with the u.s. over sanctions. there is a rosy picture of economic progress but are they looking at rose-colored glasses? and some climb on board to extend bush era tax cuts. live from the studio in washington, this is "special report". good evening. i'm bret baier. pentagon officials say they plan to conduct military exercises with south korea despite a threat from the north of what it calls a physical response. the drills and the north's reaction to them, both grow out of accusations that north korea was responsible for the sinking of a south korean warship in march. tensions are rising tonight. national correspondent steve centanni has the story from
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the pentagon. >> reporter: with military hardware in place for a pointed show of force off the kore korean peninsula, harsh words remain the weapon of choice. at asian security conference in hanoi, vietnam, they condemned the military exercises and issued this threat -- >> it will be physical, respon response. it's no longer the 19th century, which -- [inaudible ] >> but the diplomacy it is. the exercises include the giant u.s. aircraft carrier george washington, 8,000 troops from various arm forces and for the first time, the use of f-22s in the skies over that region. a direct response to the sinking in march of a south korean warship cheonan. 46 sailors were killed in the attack. north korea denies any
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responsibility, but the u.s. and the international community lay the blame on pyongyang. secretary of state hillary clinton also in vietnam responded to north korea's latest threat of violence. >> so, it is distressing when north korea continues its threats and causes so much anxiety among the neighbors and the largest regions. >> reporter: she promised to show full solidarity with the south korean people, as she did earlier this week, appearing with defense secretary robert gates wednesday in the demilitarized zone between north and south korea. today in hanoi, even before the north korean sportsman rattled the verbal saber, clinton reiterated the u.s. position in no uncertain terms. >> we regret and condemn the actions of north korea, the belligerence, the provocation, the sinking of the south korean ship
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cheonan. >> reporter: as if tensions weren't running high enough between north korea and the u.s., this bulletin just coming in from reuters. they're quoting the korean central news agency saying north korea will start a, "sacred war at any time necessary" against the u.s. or south korea. so, stay tuned. bret? >> bret: much more on this with the panel. steve centanni live at the pentagon. steve, thank you. the white house has embarked on a public relations spin offensive concerning the economy. president obama today proclaimed what he called a week of enormous progress. his number two says the tough work is behind us. white house correspondent mike emanuel tells us what they are talking about. >> reporter: after a week largely focussed on the economy, president obama highlighted actions taken to repair damage done in the recession. >> we made enormous progress this week on wall street reform, on making sure that we're eliminating waste and abuse in government and in providing the immediate assistance to people who are
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out there looking for work. >> reporter: he then pressed congress to do more by passing a bill to create a $30 billion small business lending fun. republicans say it's deja vu, something the bill sponsor rejects. >> we find ourselves debating another bail-out bill on the floor of the u.s. senate. >> i don't care what it feels like. it's what it is. this is not tarp. >> reporter: in an interview with "good morning america," mr. obama was asked if the economy had gone from something he inherited to his own problem. >> that happened the day i was sworn in. i think that we are on the right path. we're moving in the right direction. >> reporter: nevertheless, the president and the aides often blame the bush administration for the current economic woes. house majority leader steny hoyer suggested one measure signed in law on wednesday will have impact on confidence. >> it will help to free up the $1.8 trillion in cash. sitting on the sidelines in corporate america as we
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speak. >> but leading republicans say the democrats put too many regulations and restrictions on business. >> for more than a year-and-a-half, the president and his democratic allies on capitol hill push and add business, added jobs agenda on the america people in one form, in the form of one massive government intrusion after another. >> at a fund-raising event in north korea last night after a trip to gulf, vice president biden said it's time to shift to fe focus on mid-term elections. "now that the heavy lifting is over can go out and make our case." outgoing budget director peter orszag said there is still a lot of work to be done. unemployment would continue to hover at 9% next year, while this year's deficit would hit nearly $1.5 trillion. bret? >> bret: mike emanuel live on the north lawn. thanks. the administration's pay czar says 17 banks overpaid executives by about $1.6 billion in bonuses. during the time they were
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receiving taxpayer bail-outs. kenneth feinberg wants them to give the money back but does not have the power to compel that. >> ill-advised as they may have been, they did not violate any law or regulation. since most of the companies have repaid, the major ones, i doubt that you will see any further repayment.repay. >> bret: the treasury department is selling more citi group stock. the third sale. the first two unloaded 2.5 billion sales for $10.5 billion. european banking officials say seven of 91 banks failed stress tests indicating they could be in trouble if the government debt crisis worsens sharply. it is advising banks to raise $4.5 billion to shore up the finances. the european union insists the overall results confirm the resilience of the continent banking system.
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stocks ended the week on a positive note. dow gained 102 1/3. s&p 500 picked up 9. the nasdaq finished ahead 23 1/2. big decisions are looming about what to do with many bush era tax cuts that will expire over time. chief washington correspondent jim angle reports democrats are anything but unified in their approach. >> reporter: president obama wants to extend the bush tax cuts but only for those making less than $250,000 a year. now a number of democrats as well as most republicans say with a soft economy, the cuts for wealthier taxpayers should be extended, too. >> there is a growing body of evidence that the people who are a little more fortunate are keeping consumer spending up right now. raising anyone's taxes at this moment in time in this economy doesn't make economic sense. >> we are where we are. and the top 5% income bracket in this country accounts for 30% of all consumer spending. given the fragility of the economic recovery, i think it's a bad time to be raising
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taxes on that part of the population. >> connelly says he respectfully disagrees with democratic leaders who argue the opposite. >> on our side of the aisle, we need to re-examine our position on this issue from the economic argument point of view. the timing and the impact are both wrong. >> needless to say, republicans agree. >> it's a republican position that to raise taxes in the middle of a recession is a terrible idea. it's hard to find an economist who thinks it's a good idea to raise taxes in the middle of a recession. >> especially the higher tax rates and entrepreneurs and investors. presumably it's the last thing the economy needs, a nice punch to kidneys because of the automatic tax increases. >> fed chairman ben bernanke warned lawmakers at some point they have to reduce the deficit but agree with those who say for now, extending all the tax cuts will stimulate the economy. >> in the short term, i would believe that we ought to maintain reasonable degree of fiscal support, stimulus for the economy.
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there are many ways to do that. this is one way. there are other ways as well. >> treasury secretary tim geithner conceded thursday there is still uncertainty about how strong the recovery will be, but said the administration still wants the cuts for wealthier taxpayers to end. democratic leaders agree. >> with respect to the tax cuts for the wealthiest in america, we have a severe deficit problem. and those who are doing well will not have their lives adversely affected. >> increasing taxes on the wealthy may win more support after the economy recovers, but for now, a growing number of democrats worry that tax hikes on anyone will hurt the economy. some democrats suggest a two-year extension of the tax cut for the wealthier taxpayers in hopes recovery will be stronger by then and could survive a tax increase. bret? >> bret: wow! jim, thanks. speaking of taxes, a democratic senator side-steps a boat load of them with creative geography. more on that in the grapevine. another democrat says he
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>> bret: day 95 of the gulf oil spill, engineers decided to leave a temporary cap on the broken well in place despite approaching tropical depression.
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>> the skies have been active all day. many of the companies out there choosing to wait until the last minute. ships on the move as well and they are ordered out of the scene around the ruptured oil well, ordered out last night. the point man for the government thad allen says getting it out of harm's way is a slow process. last night, development driller two and three were directed to detach from the drill sites. they are disconnecting from the lower marine riser package and they are in the process right now of pulling the riser pipe. >> shutting down the container operations and moving equipment away could cause delay of up to two weeks. one of the controversial decisions concerned the
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containment cap. some argued to leave it on or take it off entirely. or relieve the vent and release the pressure but they're not doing that. because submersibles and the cameras will be gone the only way to know if it fails one mile beneath the surface of the sea is from a satellite picture, if they see the oil gushing up the surface. bret, back to you. >> bret: steve harrigan live in grand isle. thank you. senate foreign relations committee investigating whether b.p. had anything to do with the release of the lockerbie bomber is having a hard time getting someone to talk. both the current scottish justice secretary and former british justice minister declined invitations to testify next week. first details emerged behind the cause of china's worst ever reported spill. government investigation found spill was caused by overingestion of the desulfurizing agent in the pipeline cousing it to explode. state media says the chinese authorities ordered increased
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safety measures in ports across the country. military and government officials in afghanistan say several taliban figures were captured in raids across the country, including a former insurgent spokesman. a bomb exploded today in a mosque in the east. parliamentary candidate was seriously wounded. the defense department says several dozen military personnel and contractors in the u.s. have been accused of acquiring child pornography. the list includes people with top level security clearances. many used government computers to download the material. some of the suspects were convicted, some had charges dropped. cases of others are still open. if you have a chance to go to the president's birthday party, you will have to bring a checkbook. we'll explain. and one senator who wrote a huge check for a luxury yacht decides not to pay taxes on it in his home state. with orbitz, i know what to expect from my vacation. bless you. cannonball. [ sneezes ]
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because orbitz has hotel assurance. polite frenchmen, blinding sun, woman with computer. apres vous. with hotel photos, unfiltered customer reviews, and interactive maps, so i know the hotel inside and out before i go. and i like knowing what to expe. exaggerated slide, over-the-top fall, no harm done. i'm fine. when you orbitz, youw.
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>> bret: now fresh pickings from the political grapevine. massachusetts democratic senator john kerry is able to save a boatload of green parking the yacht in the blue waters off of rhode island. the "boston herald" says he saved $440,000 in sales tax when he bought the $7 million ship in rhode island instead of massachusetts and he keeps more money by mooring it in
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new port to avoid the state's luxury tax. kerry's office denies any profit motives saying the boat is based in newport for "long-term maintenance, upkeep and charter purposes, not tax reasons." if you are feeling generous, you could celebrate the president's birthday with the president himself at a private party. the suns times report that he is throwing a dinner for president's 49th birthday, august 4. but an invite requires a $30,000 donation to the democratic national committee. with that entry fee we guess a birthday gift is optional. there is also a fundraiser the next day for alexi giannoulias, whose family bank was taken over by the government you may remember. mark kirk is facing questions about his truthfulness, regarding details around the three decade old sailing incident on lake michigan.
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the "chicago tribune" says he speaks of a near death experience when the sailboat cap-sized and he was rescued from the coast guard but the paper says there are inconsistencies in the story, and have been exaggerated like kirk says he swam up the water with body temperature lower which experts say were improbable. they did not respond to our request for comment. and finally, ed schultz had criticism for white house. the "seattle post intelligencer" says schultz reported, "i busted -- the talk point memo adds that schultz said he was really angry because msnbc, "did a
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hell of a job fighting for healthcare." tonight in the series "uni "unions: can america report them," we look at foreign owned auto company using non-union workers down south. >> applicants line up to fill 500 new jobs at bmw's plant in south korea. a sign of the relative health of the foreign auto makers building cars and largely southern non-union plants. the success of america's other auto industry prompted the ray boar unions representing workers at chrysler, ford, and general motors to agree to dramatic changes over recent years, to save jobs at the big three. >> union and non-union pay rate now and benefits for
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that matter tend to be identical. >> les huff says the non-union shop provide employers with the option of management prerogative, the ability to reassign workers to a different task to adapt to market trends. >> the united auto workers bill provided greater management plexability in their plans than was once the case. they tended to have at one time very complex job classification systems. >> foreign auto makers downplay the influence right to work laws had on their decision to build plants in the south. >> people will decide about their representation. >> when you look at the port and transportation, the south became natural place for us to be. that's why we're here. >> 503. >> for many workers in the south, the non-union environment is a non-issue
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because of the good reputation foreign auto maker esenjoy. >> the companies need union because they're paying their people well, benefitting them well. safety and so on. >> they say the jobs are nothing to haggle over. jonathan serrie, fox news. >> bret: at this hour, retirement ceremony is underway for general stanley mcchrystal who commanded u.s. troops in iraq and u.s. and nato troops in afghanistan, left the position last month, you may remember, after aides made insensitive comments about the administration officials in a magazine story. defense secretary robert gates is throwing the party and praised the general for his role in america's two wars. veteran news man daniel shore has died. shore worked 23 years at cbs news, where he so angered then president richard nixon he ended up on the white house enemy's list. shore spent the final years of his career at npr. he was 93.
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north korea threatens a, "sacred war" with the u.s. we talk about what that means with the fox all-stars. after a quick break.
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it will be a physical preresponse, by the united states militarily. no longer the 19th century. [ inaudible ] >> it is distressing when north korea continues its threats and causes so much anxiety among its neighbors. and the larger region. the united states stands in firm support of the defense of south korea. >> bret: just before the show started tonight, north korea issued a statement through the korean news agency threatening a sacred war with the u.s. this comes as military
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exercises have started off the korean peninsula in direct response to the sinking of a south korean warship in march that killed 46 sailors. back then in that attack. north korea denies any responsibility, but the u.s. and the international community lay the blame squarely on pyongyang. you may have seen this picture of secretary clinton and secretary gates in the demilitarized zone. there you see a north korean soldier looking through the window there. it's an amnous picture on the -- ominous picture on the front page of a couple of newspapers in the u.s. tensions -- the bottom line, tensions are rising tonight. bring in the panel. bill kristol editor of "weekly standard." juan williams -- there is bill kristol. and juan williams. with national public radio. syndicated columnist charles krauthammer. bill, start with you. since we didn't see you there. what do you think? >> it's my mysterious image. they can't show me straight on in the camera.
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north korea is a horrible regime that has gotten away with things in the past. secretary clinton and gates have been strong. this is a situation the obama administration came in office, disliking what the bush administration had done, vis-a-vis north korea, and announcing a new relationship with china, strategic reassurance. jim steinberg giving a speech on this. they were mugged by reality. problem wasn't bush. it was north korea. china has not helped us make north korea a responsible state. the obama administration to its credit recognized that and now they sign like a traditional american administration. standing by the allies and the japanese. they are rethinking the attitude toward china, they
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hoped to be helpful international partner. now they treat it with wariness. >> bret: juan, many times in the u.s. we're dismissive of north korea threats as they talk out a lot. general clapper, lieutenant general clapper nominated for the national intelligence director said in his testimony this is a very dangerous time when it comes to the north. the provocation with that warship take down the south korean warship indicates to him and the intelligence community he said that this is extremely dangerous. >> it is dangerous. i think it's important. you know, hillary clinton used language, the word "belligerent" and "isolated" regime. it's also that they lie. they said they had nothing to do with the sinking of the warship, which is evident to everybody, even the supporters in china that say yeah, we understand what happened here. they think they can get away
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and lie to the world. china has to step up to the plate. this week, after the asian security conference that secretary clinton and gates attended -- >> bret: in vietnam. >> right. they were concerned about the idea that china continues to have dispute about series of island in the south china sea with vietnam. of course, they have been encouraged by some of china's action, especially with regard to iraq. you know, not sufficiently that they would change anything greatly, but they started to cooperate in terms of the foreign policy instead of act like they have no responsibility with global affairs. when it comes to snarz, here is the question. are they going to stand with the united states in dealing with the problem that is right in their neighborhood, or are they going to say it's none of our business and allow the united states and allow them to become entangled? >> we know the answer. china is not going to act on our behalf.
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plead with the administration as the former administration. after a while of trying, realize realizes no help use to helping us. they don't want consequences of what would happen to them if there were collapse of regime and flood of refugees. they have every interest to maintain it as a problem. it's good that we realize chinese won't help us. it takes years for the administration to understand. the administration response has been exactly right. speak softly and carry a big stick. secretary of defense in seoul warning north korean that an attack will be an attack on the united states. this is dangerous, because
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they're capable 60 years ago in june. this is an in succession crisis, because the leader is dying. >> bret: kim jong il. >> they have a secretive and isolated regime and you can get actions that are highly irrational, and result in a war. not likely we'll have a war. but the probability is not zero. >> bret: intelligence community believes north korea has at least one nuclear weapon. they have been testing long-range missiles that is a three-stage missile if it worked could reach the western part of the united states. it hasn't worked. as we have seen yet. charles, how real is the threat of putting that altogether? to us.
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>> i don't believe it's anything that the north koreans contemplate using. nobody usedn w nuclear war since hiroshima. the threat is to keep anyone else invading you with a conventional army. that's why it helps the north koreans. i can't imagine a military use for nuke. a crude weapon, hard to deliver. it won't reach us and it could only attack the south. i would mean utter deavor station and destruction of the north -- utter devastation of the north. they're irrational but that is completely nuts. >> bret: could we shoot it down, bill? if they fired a missile this way? >> i hope so. but probably not. they could also proliferate. they're a dangerous regime, they're short of cash and regimes out there to like be
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dangerous. all the talk of the soft power and this is gun -- [ inaudible ] diplomacy as the north koreans say. i give the obama administration credit that goody blow massey is gun boat diplomacy. >> bret: the news ticker at the bottom of the screen on the channel runs on take the news ticker from the website and embed it in yours. just go to click on embed link. next to ticker at the top of the site. it goes to your computer. imagine that. we'll be right back with the friday lightning round.
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>> bret: every week on the home page, viewers vote on the topic to discuss first in the friday lightning round. today, winner is -- drum roll, please -- the newly minted tea party caucus in the house of representatives. there you see the votes. 4,306 votes for the tea party caucus. so what about it? back with the panel. good or bad thing? what will it do? charles? >> it's risky for the members of congress, because as you is an in the announcement by michelle balkman, the chair -- >> representative from minnesota. >> right. she went to great pains to dissociate herself and emphasize they're not a part of or connected with the movement. they are just sympathetic. if anyone on the fringe says anything odd, looney or
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extreme they will ask for a reactio reaction. i think it's unnecessary association in an election year where the republicans already have the wind at their back. >> bret: juan? >> well, you know, i guess they think this is politically advantageous to them. otherwise they wouldn't be doing it. they think it will get them votes. they are riding a wave. when i look around, and, you know, see what michelle balkmann had to say at the press conference, i can't tell what they stand for. they made it clear they dissociate themselves from most of the tea party activities. but they don't want to raise taxes or think government should be bigger. most americans believe that, but you have to have some shape to it. this is a deeper problem. when you look at sharron
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angle or marco rubio, and look around the country you see in fact you could make the case that the tea party candidates are not helping the republican brand. so will the tea party caucus help the republican brand in the house? i don't know. >> bret: bill? >> yes. it will. trust me. >> i'm glad you're reassuring. >> i've spoken the tea party, i love the tea party people, most of them. almost all of them. look, that's where the energy is. michelle balkman is heroine of the tea party and encourages them and it makes sense to be welcome to them in a quasi-official way. it's millions of people involved and decentralized, it's a guy somewhere to say something stupid. but nazi party will say something stupid somewhere. i mean, michael steele the chairman of the republican party has said stupid things. i go with the tea party over the establishment, still. >> bret: second topic. charles rangel, former chairman of the house ways and means committee. he will face next week what is essentially a trial in the
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ethics committee in the house. for a long list of charges. you may remember the house speaker nancy pelosi in september of 2008 said these charges and all the investigation will be finished by the end of this congress. that was 2008. she was talking about january of 2009. we're july 2010. back with the panel. bill? >> i have a soft spot for charles rangel. he is a little corrupt but he doesn't do as much damage for other big-spending democrats that wasted money. >> bret: you had them at the tea party thing. i think you lost them there. >> he is a revered member of congress. he has been around 40 years. he came in office replacing adam clayton powell, saying that adam clayton powell with ethics problems needed to be thrown out and he was a reformer. 40 years later. here is charles rangel now,
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miring his own ethics problem and guess who is running against him in harlem? adam clayton powell jr. son. i don't think he can beat charles rangel, but i share bill's feelings. so sad. rangel is a good guy in washington. >> bret: didn't take taxes on his vacation home and a long list of things, including some rent control issues in new york. if that all pans out, charles. >> if all that is true, but if he gets a bill and juan on the jury he will be acquitted. the democrats are very afraid of this trial in september. remember, the administration began with the mean that democrat lay taxes but don't pay them. geithner, tom daschle, et cetera, and this would remind people of that theme which sort of gone away about democrats. he was, of course, head of the -- charles rangel head of the tax writing committee. >> bret: so you are say agriculture of corruption --
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>> it reminds them, democrats don't pay taxes as a theme. that's not what democrats want to have in an election year when they are losing anyway. >> bret: quickly, msnbc anchor ed schultz at net roots nation conference in las vegas talking about the interview we had on the show and said i busted my a-s-s for obama. he doesn't go on ed, he goes on bret baier on fox news in my time slot and said msnbc did a hell of a job fighting for healthcare. down the line. what do you think of that? >> spokebe like a party -- spoken like a party hack. ework for the party. where is my payoff? the answer is it's not there because nobody watches the show. >> i don't think he gets half the ratings of this show. >> bret: that is a fact. bill? >> i wasn't invited to speak at the net roots nation. i'm kind of upset about that, actually. nor have i been invited to be on his show. here i am. stuck with you, bret. >> bret: thank you. >> you're going to be on the rangel jury. that's why. >> bret: the rangel jury.
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that's it for the panel. stay tuned for example of a very tough crowd. i got an egg a candy necklace an orange a band-aid a stamp helium i got a mustache [pop] lipstick
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>> bret: finally tonight, when lawmakers head to the white house to talk to the president or other administration officials there, many times they come out to the microphones outside the west wing to try to get some face time, take some questions, show they are important. well, this week congressman patrick murphy, a democrat from pennsylvania came out to talk policy. and, well, -- >> and as a second-term member of congress, i know it's been my focus to make sure that we're doing what we can to get our country back in the right fiscal track. i would be honored to answer any questions that you have. >> i'm a libra, i like long walks on the leach -- beach with my wife. i have young kids. >> >> bret: crickets chirping at the microphone tonight. that's it for this "special rt
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